ROBT - Barclays: Spotlight is on tech and AI as EPS dispersion widens

2023-07-14 10:32:26 ET

Barclays said Friday that Wall Street expectations for tech sector earnings and puts that segment of the S&P 500 ( SP500 ) into a spotlight "as it looks to grow into elevated valuations.”

“EPS estimate dispersion is widening for tech stocks while narrowing for the rest of the SPX. We think this reflects the broad range of outcomes for AI in its nascent phase," the firm stated in an investor note.

The bank went on to add that this is something that investors should keep an eye on as fundamentals are coming more into focus based on implied volatility. These conditions could move the market towards favoring more active management approaches with earnings season kicking into gear.

“We think the higher dispersion of estimates for tech ... underscores the challenges that remain for these companies to earn into their valuations," Barclays argued. "We saw a similar divergence in EPS estimate dispersion between big tech and the rest of the S&P 500 during the post-COVID recovery, which ended up working out for big tech as the group delivered on expectations.”

For investors looking to analyze the artificial intelligence space further, see below a grouping of popular AI focused exchange traded funds:

• GX Artificial Intelligence & Tech ETF ( AIQ )
• GX Robotics & Artificial Intelligence ETF ( BOTZ )
• iShares Robotics and Artificial Intelligence Multisector ETF ( IRBO )
• Artificial Intelligence and Robotics ETF ( ROBT )
• Robo Global Artificial Intelligence ETF ( THNQ )
• Roundhill Generative AI & Technology ETF ( CHAT ) ( Recently launched on May 18 ).

In Friday's early trading, the S&P 500 ( SP500 ), Dow Jones ( DJI ), and the Nasdaq Composite ( COMP.IND ) all moved higher early on while Treasury yields also moved up.

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